Why a workplace pension?
Auto enrolment has been introduced to get more people saving for their future. It means your employer will have to give you access to a workplace pension plan if you're not already in one.
Why is this happening?
People are living longer which means more years spent in retirement. The State pension is unlikely to be enough to maintain your current lifestyle when you retire.
How will I be affected?
The way you're affected depends if you're defined as a 'worker' for the purposes of auto enrolment.
A worker is someone who:
- Works under a contract of employment (an employee).
- Has a contract to perform work or services personally and is not undertaking the work as part of their own business.
If you're an agency worker or self-employed contractor, you should contact your agency or employer for more information.
What does this mean for me?
Your employer will assess your age and earnings to work out what type of worker you are and how you're affected.
You'll be automatically enrolled into your employer's pension plan if you:
- are aged between 22 and State pension age
- work or usually work in the UK and,
- earn more than £10,0001 each year.
You'll make a regular contribution into the plan and your employer and the taxman will also help you to save.
If you don't meet these conditions, you could still be given the option to join.
Your employer will tell you how you're affected and more about the plan.
When will auto enrolment apply to me?
The date auto enrolment applies to you depends on the size of your employer. Your employer will let you know nearer the time.
I'm already saving into my employer's plan, how will I be affected?
Your employer must ensure that the plan meets the Government's standards for auto enrolment. They'll let you know if there are any changes.
Can I opt out?
Yes. Once you're in the plan you'll be able to opt out. Remember that by opting out, you'll miss out on contributions from your employer and the taxman.
Can I opt back in?
You should speak to your employer for more information.
What if my circumstances change?
Your employer will regularly review your age and earnings. If your circumstances change, they'll let you know how this affects you.
1 This is the figure for the 2015/16 tax year.